Income
Before you can budget, invest, or do anything else with money—you need money coming in. That's income. It's your starting point, the raw material for everything else in personal finance.
For most people, income includes:
- Your paycheck — the big one for most of us
- Side gigs — freelance work, tutoring, driving for Uber
- Selling stuff — that old couch on Facebook Marketplace
- Gifts — birthday money, holiday checks from Grandma
- Interest & dividends — money your money earns (more on this later)
The simple test: Did money land in your account? That's income. The goal right now isn't to maximize it—it's to know what you're working with.
Setting Up Your Accounts
A great starting point is to open a checking account at a local credit union. Credit unions are member-owned, which often means better rates, lower fees, and great customer service. Plus, having a local branch is handy when you need to do something in person.
Before you commit: Make sure your credit union has solid online banking features—mobile check deposit, easy transfers to external accounts, and a decent app. Some smaller credit unions are behind the times here, and you'll need these features for automation later. If your local options don't cut it, an online-only bank works just as well.
Once your checking account is open, set up direct deposit so your paycheck lands there automatically. This becomes your financial home base—where bills get paid and daily spending happens.
Speaking of online-only banks, you should also open a savings account with an online bank like Ally or Discover. These typically offer much higher interest rates than traditional banks—sometimes 10-20x higher. This will be your emergency fund (more on that later).
Key Takeaway
Keep your finances simple at the start:
- One checking account for daily spending and bills
- One high-yield savings account for your emergency fund
- Direct deposit set up to automate the flow
That's it. You don't need five different accounts or complicated systems. Start simple and add complexity only when you need it.